What happened
A secondary stock offering was the catalyst behind Granite Ridge Resources(NYSE: GRNT) hitting a dry patch this week. Following the pricing of the 7.1 million-share sale on Tuesday, the oil and gas company's shares went on to shed over 23% of their market value, according to data compiled by S&P Global Market Intelligence.
So what
Granite announced that funds managed by Grey Rock Energy Management are selling that stock in an underwritten secondary offering. In addition to the 7.1 million common shares on the table, the issue's underwriters were granted a 30-day option to buy up to an additional total of nearly 1.07 million shares.
The issue was priced at $5 per share; the negative investor reaction was due to the fact that this was well under the $6-plus closing price of Granite Ridge stock on Monday.
The underwriting syndicate was led by Bank of America Securities, Capital One Securities, Evercore ISI, and Stephens. The offering was expected to close on Friday.
It was not immediately clear why the selling shareholders were unloading their shares. Granite Ridge stressed that it will receive no proceeds from the issue, as the energy company is not the selling party.
Now what
The two listed sellers, the funds GREP Holdco III-A and GREP Holdco III-B Holdings, are selling only a small part of their positions. At the moment, the pair together own slightly over 47% of Granite Ridge's outstanding common shares; that will drop to at least 41% after the sale, depending on how much stock the underwriters purchase with their option.
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